Blog Entries by Jeff Cioletti

We’re already at least six weeks past the Super Bowl, so I’m probably the last person to weigh in on the brew-ha-ha over Budweiser’s “Brewed the Hard Way” ad—you know the one where Bud proudly owns its “macro-beer” cred and gets in a jab about “pumpkin peach ale.” But the ad’s still in fairly heavy rotation as of this writing and the chatter surrounding it seems to be lingering long after the Patriots’ last victory lap.

It was the (some say cheap) shot heard ’round the craft beer world, which was predictably, but understandably up in arms.

I completely get where Anheuser-Busch was coming from with the ad’s tone. It was 100 percent in line with the brand’s personality and spoke directly to its target demographic. Bud drinkers are unapologetic about being Bud drinkers even when they’ve got a growing number of friends and acquaintances who make a sport out of bashing the brand and try to get them to drink craft (many brewers of which AB InBev now owns). The ad reinforces their Bud-loyalty and keeps them from straying outside the trademark. In politics, they’d call that “playing to the base,” which is exactly what A-B needs to do for a brand that continues to hemorrhage volume in the low single digits each year.

The spot does make its share of missteps however—and, to be fair, it’s a tall order for all 60 seconds of any minute-long ad to be perfect.

The obvious component, and the one that I am by no means the first person to highlight, is the “pumpkin peach ale” slam. While I’m sure it wasn’t the company’s intention, it comes off as a dig at a craft brewer it just acquired barely a week prior to the ad’s debut: Elysian Brewing Co. Elysian is well known for its diverse array of pumpkin beers (sans peach).

And I’m not even going to get into the subtext embedded in “pumpkin peach ale.” Tonally, it equates such a style with being a “girlie” beer, which does little to reverse the generations-long trend of alienating women from the category.

The spot also does somewhat of a disservice to the brewers and QC staff of Budweiser itself. Saying the brand is not to be “fussed over” is probably news to the production team. The production team fusses over it plenty to make sure it is of consistent quality and flavor, batch after batch, year after year. It also contradicts the “Brewed the Hard Way” mantra. People should make a fuss over the end product of so much hard work.

Oh, and one more thing about making things the hard way. Get any 100 craft brewers in a room and I’d be willing to bet that not one of them characterizes what they do as “easy”—especially when they’ve got a fraction of the operations staff that the King of Beers has on the payroll.

To A-B’s credit, it’s a brilliant marketer and knows exactly who’s drinking and whom it expects to drink each product in an increasingly diverse portfolio. The company will do well to continue to play to those bases. However, to use another political analogy, the path without so much mud slung on and around it is the clearer path to victory. BW

It seems at least once a day I’m getting a Google alert linking to an article or blog entry about how the millennial consumer is changing the wine business. Some wine producers, for instance, are racing to meet millennials’ demand for sweeter products. Other marketers are cobbling together folksy details about their respective wineries’ histories to satisfy Gen-Y’s supposed quest for “authenticity.”

And then I read about industry studies that claim millennials like to thumb their noses at consumption conventions and will, for example, drop ice cubes in their fine Cabernets and drink their Pinot Noir out of a red Solo cup with a straw. Because they’re millennials, damn it, and they’ll do things their own way.

Look, I’m all for beverage categories adapting to evolving markets. The only constant, as they say, is change, and change should be embraced.

But what marketers should be cautious about is undermining whatever cachet generations before have worked hard to build for their beverages. Don’t sacrifice premium positioning in hopes of wooing a few more members of a generation not particularly known for its attention span. You’ll be working a lot harder to win over the next generations once the current one migrates away from your category.

That “authenticity” component that those born, roughly, after 1981 crave so much isn’t just about how something is produced or what size company is producing it. It’s also about the classic rituals that make consuming those products enjoyable and a journey worth taking. That means keeping the theater of it all, including appropriate serving vessels, intact. It’s true that millennials rail against pretension, but there’s nothing pretentious about heightening the drinking experience to maximize enjoyment. Instead of trying to bring your beverages to millennials, try bringing millennials to your beverages.

Over the course of these past few paragraphs, the m-word has appeared six times, which, admittedly, makes me part of the problem. I, like the rest of the media, have bought into the concept of the “millennial” (there it is again), formulated by Ivy League marketing MBAs to paint a very diverse and individualistic group of people with extremely broad strokes. My challenge to that generation: don’t let them. Quite frankly, those of that age group within my own social circle actually loathe being labeled with the scarlet M (and they drink their wine and beer in the appropriate glassware, sans straw and sans ice). I have a sense that that may not be such a unique sentiment. Gen-Y should be speaking up and speaking for themselves and not allowing them to be pigeonholed by the establishment.

And, my challenge to the market: Don’t believe the hype. Market research can be rife with overgeneralizations in its attempt to find some order in data points that are really all over the map. No one knows your consumers better than you do. And they’ve gravitated to your products for a reason. To thine own self be true. BW

A couple of months ago I noted that the breadth of available choices is what makes the U.S. beverage market—especially beer and spirits—the envy of the rest of the world. I witness this as a consumer, as much as I do as an industry observer. I frequent a lot of bars that boast, 25, 50, even 100 tap handles. Their whiskey lists are intimidatingly robust; I don’t think I’ll get to try half of the items on the menu in this lifetime.

But is such on-premise abundance always a good thing?

At many of my local haunts, it’s not uncommon for Monday’s chalkboard list of what’s on tap to look nothing like the one on Thursday. There’s a complete turnover. If you happened to like something you tried Monday night, you’re out of luck if you want to drink it again later in the week. And I’m as guilty of enabling this as anyone. My M.O., more often than not, is to try something new rather than default to the familiar. When there’s wait service, the server returns to my table and usually asks, “Could I get you another X?” My response tends to be, “No, this time I’ll have Y.”

More than a few distributor reps with whom I’ve spoken have admitted that while it’s great that their on-premise accounts are eager to buy so many small, up-and-coming brands, it stresses their entire system to fulfill such variable demands so frequently. It’s not just a huge order of a handful of high-velocity SKUs anymore. It’s an epic series of micro-orders of much lower-volume products.

Distributors, to their credit, have adapted fairly well to this new normal.

The real potential casualty in all this, however, is brand loyalty. I know, I know, marketers always tell me “On-premise is where consumers experiment and off-premise is where they’ll buy the six-pack of the beer or a bottle of the bourbon they discovered during the course of their experimentation.”

But shouldn’t we be worried that, essentially, on-premise is completely ceding any notion of brand allegiance to the off-premise?

The craft beer world and now, to some extent, the craft spirits talk about the “wine-ification” of their products. The dark side of that dynamic is that when menus turn over so quickly to keep up with consumers’ brand A.D.D. (again, guilty as charged), bar and restaurant patrons are just going to order by style, not brand, as is often the case with wine. I.P.A. will be the new Cabernet. And don’t think that this behavior won’t spill over into the off-premise as well. It already happens off-premise with wine and I have witnessed it on occasion with beer and spirits. Consumer: “Do you have Russian River Pliny the Elder?” Retailer: “No, but we just got a couple of bomber bottles of this double IPA from a new brewery that just opened in Virginia.” Consumer: “Great, what brewery?” Retailer: “I don’t remember.” Consumer: “Whatever, I’ll take it.”

And with that brief commercial exchange, another tiny nail is driven in the coffin of brand loyalty.

It always amazes me how quickly people are so ready to throw the baby out with the bathwater when something doesn’t quite work in a manner entirely favorable to them. I’ve been hearing/reading a lot of chatter, particularly in the blogosphere, where folks are taking to task the three-tier system, going so far as to say it should be eliminated. Excuse me?

Look, I am a strong proponent of franchise law reform. In some states it’s next to impossible for a craft brewer or other small alcohol beverage producer to get out of a draconian contract when the supplier/distributor relationship isn’t working out. Now that there are more than 3,100 U.S. small brewers, whose influence continues to grow, I’d like to see them effect real change at the state and federal levels.

But too many people—particular badly informed, one-sided bloggers—equate franchise law reform with dismantling the three-tier system. The two are mutually exclusive.

Ask most successful craft brewers (or distillers and wine makers for that matter) and many likely would admit—albeit sometimes grudgingly—that they would not have grown to the level they’ve achieved without the three-tier system and the work of distributors. Does that mean they shouldn’t be allowed to self distribute? Of course the should. Small producers that operate in states that permit self-distribution have been able to bootstrap themselves to a point where they got on the radar of wholesalers that have been able to help them expand to the next level. Most self-distribution has been out of necessity and once someone else is willing to take it over, the majority of small beverage alcohol suppliers are happy to be out of the distribution business. (Having said that, the three-tier system is far from perfect—at best a necessary evil.)

And about that 3,100 figure. There would only be a fraction of those brewers thriving in the market if there was no three-tier system in place. One need only look overseas for what could have become of the modern U.S. market (and actually had before Prohibition). Walk into an average bar in many European cities and your choices are limited, for the most part, to the products from one brewery. That’s the tied-house system still at work in those countries. The 21st amendment forbids that in the U.S.. And I think we’ve started to take for granted the diversity that our system has allowed us.

Our system is the envy of the rest of the world, by the way. And the U.S. craft movement has sparked revolutions around the world where small brewers are starting to squeeze their way into the market. It’s a little tougher for them to get into existing tied-house bars, so specialty pubs have started to pop up showcasing those small European brands. But those are still the exception and not the rule and still have a long way to go to achieve broader market exposure.

I’ll leave you with this thought. Just imagine an America where an AB InBev or SABMiller got into the pub and retail business and started buying up local watering holes. Then imagine what the array of tap handles would look like. Where’s that diversity now?

I more than eagerly seize every opportunity to tout how beer consumers live in a time of unprecedented choice. That’s never more apparent than at the Great American Beer Festival (GABF) and this year’s edition was no different.

But it’s not just craft brewers that sample their products, as the likes of Pabst, Anheuser-Busch and MillerCoors tend to have tables and the awards competition features categories like the macro-friendly American Style Light Lager.

Of course, the big guys have been putting out craft-like brands, much to the chagrin of the small brewers.

I’ve tried to be Switzerland on the “craft” versus “crafty” debate, primarily because it’s really just semantics. I know what I like to drink and I know what I don’t like. I also believe that whatever brands I personally choose not to drink have a right to exist so other consumers have a chance to choose whether or not to drink them. (Having said that, I also believe in brands being upfront about their origins, enabling consumers to make informed choices.)

One of my more eye-opening experiences as GABF last month actually involved one of those large brewers playing in the craft sand box (or Sandlot in this case), Blue Moon—the MillerCoors brand that’s been singled out as a macro in craft’s clothing. Blue Moon invited me to its booth for a tasting and meet and greet with brewmaster John Legnard. I sampled some of the brewery’s latest, little-known limited offerings including First Peach Ale, a brown ale with a slightly tart peach note; White IPA, a hybrid of a Belgian-style wit and an India pale ale; and Cinnamon Horchata Ale, which very closely mimics the taste of the Latin American beverage it emulates. Some of my fellow craft-devout might unfriend me for what I’m about to say, but so be it: They were actually quite flavorful. Blue Moon may not be everyone’s choice, and that’s okay. But it has a right to be a choice. If I had let geeky biases get in the way, I would have missed out on a fairly memorable malt-and-hops moment. Score one for cognitive dissonance.

You know what else has a right to be a choice? Macro-produced, corn-and-rice-filled light lagers. Celeb chef David Chang recently got lambasted by many in the craft community for a GQ blog entry in which he declared, “I love cheap, watery, swill.” Hey, to each his own. Time and place for everything, right? One of my own fond beer memories involves sitting on a rickety plastic stool in Vietnam, eating cockles grilled on the sidewalk and drinking the local mass-produced adjunct-laden light lager…over ice! I wouldn’t make a habit of it, but, you know, when in Saigon…

Back in the states, the breadth of available choices is what makes the beer market here the envy of the rest of the world (at last!) The argument against the multinational brewing behemoths has been that for decades they’d limited the options available to consumers. I think it’s critical for those of us who champion the underdog (and yes, I include myself among those champions) to not do the same by begrudging someone a selection that might not quite mesh with our own sensibilities.